We are pleased to present this semiannual report for Dreyfus Investment Portfolios, MidCap Stock Portfolio, covering the six-month period from January 1, 2017 through June 30, 2017. For information about how the fund performed during the reporting period, as well as general market perspectives, we provide a Discussion of Fund Performance on the pages that follow.
Financial markets generally rallied over the first half of 2017 as corporate earnings grew and global economic conditions improved. While the rally was relatively broad-based, U.S. stock market leadership shifted toward larger, growth-oriented companies and away from smaller, economically sensitive companies that had been expected to benefit from a new presidential administration’s stimulative policy proposals. International stocks fared particularly well amid more positive economic data from Europe and the emerging markets. In the bond market, despite short-term interest-rate hikes from the Federal Reserve Board, yields of longer-term U.S. government securities moderated somewhat and prices rose when it became clear that major tax and fiscal reforms would take time and political capital to enact.
The markets’ strong performance has been supported by solid underlying fundamentals, most notably rising corporate profits, a robust labor market, and muted inflation. While we currently expect these favorable conditions to persist over the second half of the year, we remain watchful for economic and political risks that could derail the rallies. As always, we encourage you to discuss the risks and opportunities of today’s investment environment with your financial advisor.
Thank you for your continued confidence and support.
DISCUSSION OF FUND PERFORMANCE
For the period from January 1, 2017 through June 30, 2017, as provided by C. Wesley Boggs, William S. Cazalet, CAIA, Ronald P. Gala, CFA, Peter D. Goslin, CFA, and Syed A. Zamil, CFA, Portfolio Managers
Market and Fund Performance Overview
For the six-month period ended June 30, 2017, Dreyfus Investment Portfolios, MidCap Stock Portfolio’s Initial shares produced a total return of 4.48%, and its Service shares produced a total return of 4.33%.1 In comparison, the fund’s benchmark, the S&P MidCap 400® Index (the “Index”), produced a total return of 5.99% for the same period.2
Mid-cap stocks gained ground over the first half of 2017 amid better-than-expected corporate earnings reports and favorable global economic developments. The fund lagged its benchmark, primarily due to shortfalls in the information technology, consumer discretionary, utilities, and real estate sectors.
Effective March 9, 2017, Peter D. Goslin and Syed A. Zamil became portfolio managers for the fund.
The Fund’s Investment Approach
The fund seeks investment results that are greater than the total return performance of publicly traded common stocks of medium-sized domestic companies in the aggregate, as represented by the Index. To pursue this goal, the fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in stocks of mid-cap companies.
The fund invests in growth and value stocks, which are chosen through a disciplined investment process that combines computer-modeling techniques, fundamental analysis, and risk management. Consistency of returns compared to the Index is a primary goal of the investment process.
The portfolio managers select stocks through a “bottom-up,” structured approach that seeks to identify undervalued securities using a quantitative ranking process. The process is driven by a proprietary quantitative model that measures a diverse set of corporate characteristics to identify and rank stocks based on valuation, momentum and sentiment and earnings quality measures.
Earnings and Economic Growth Supported Ongoing Rally
Over the first half of 2017, equities generally continued to build on gains achieved during the final months of 2016. Consecutive quarters of better-than-expected corporate earnings and encouraging global economic developments drove the Index to a series of new highs in February and early March. While concerns about the new U.S. presidential administration’s ability to implement its business-friendly policy proposals slowed the pace of the market’s advance in the early spring, mid-cap stocks quickly erased those losses and reached new all-time highs in June.
Eight of the Index’s eleven market sectors produced positive absolute returns during the reporting period, led by the health care and information technology sectors. In contrast, the energy sector was undermined by weakening oil and gas prices, and telecommunication services stocks also posted negative returns during the period.
Fund Strategies Produced Mixed Results
The fund participated significantly in the Index’s gains over the first half of the year, but its relative performance was constrained by some security selection and industry allocation shortfalls. In the information technology sector, disappointing stock picks, particularly among software
3
DISCUSSION OF FUND PERFORMANCE (continued)
companies, weighed on results compared to the Index. In addition, the fund’s security selection process proved relatively ineffective in the utilities and real estate sectors. An overweight exposure and disappointing stock selection detracted from performance within the specialty retail industry in the consumer discretionary sector.
Among individual holdings, bedding manufacturer Tempur Sealy International lost value when a contract was terminated with a key retailer of the company’s products. Industrial distributor HD Supply Holdings declined when it missed quarterly earnings targets and announced a divestiture that was expected to be dilutive to earnings. Real estate investment trust Tanger Factory Outlet Centers declined sharply when it reduced future earnings guidance in an increasingly challenging retail environment.
On a more positive note, the fund achieved better-than-average results in the lagging energy sector, in part due to underweighted exposure to energy equipment providers. Stock selection in the oil, gas, and consumable fuels industry also added value to the energy sector. The fund also benefited from relatively strong stock selections in the financials sector. The top individual performer for the reporting period was medical instruments supplier Mettler-Toledo International, which reported better-than-expected earnings and issued higher future earnings guidance to analysts. In the industrials sector, homebuilder NVR advanced steadily over the reporting period after a positive earnings surprise in January. In the materials sector, glass containers manufacturer Owens-Illinois reported better-than-expected earnings over two consecutive quarters.
A Disciplined Approach to Stock Picking
As of the reporting period’s end, our quantitative models have continued to identify what we believe are attractive investment opportunities across a broad spectrum of mid-cap companies and industry groups. Indeed, recent bouts of volatility have provided opportunities to purchase the stocks of companies ranked highly by our process. When the fund’s holdings reach what we perceive to be fuller valuations, we expect to replace them with high-quality companies that display then-currently attractive valuations in our model. In addition, we continue to maintain a broadly diversified portfolio.
July 17, 2017
Please note: the position in any security highlighted with italicized typeface was sold during the reporting period.
Equities are subject generally to market, market sector, market liquidity, issuer, and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund’s prospectus.
Stocks of mid-cap companies often experience sharper price fluctuations than stocks of large-cap companies.
The fund is only available as a funding vehicle under variable life insurance policies or variable annuity contracts issued by insurance companies. Individuals may not purchase shares of the fund directly. A variable annuity is an insurance contract issued by an insurance company that enables investors to accumulate assets on a tax-deferred basis for retirement or other long-term goals. The investment objective and policies of Dreyfus Investment Portfolios, MidCap Stock Portfolio made available through insurance products may be similar to those of other funds managed by Dreyfus. However, the investment results of the fund may be higher or lower than, and may not be comparable to, those of any other Dreyfus fund.
1 Total return includes reinvestment of dividends and any capital gains paid. Past performance is no guarantee of future results. Share price and investment return fluctuate such that upon redemption, fund shares may be worth more or less than their original cost. The fund’s performance does not reflect the deduction of additional charges and expenses imposed in connection with investing in variable insurance contracts, which will reduce returns.
2 Source: Lipper Inc. — The S&P MidCap 400®Indexprovides investors with a benchmark for mid-sized companies. The index measures the performance of mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment. Investors cannot invest directly in any index.
4
UNDERSTANDING YOUR FUND’S EXPENSES (Unaudited)
As a mutual fund investor, you pay ongoing expenses, such as management fees and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You also may pay one-time transaction expenses, including sales charges (loads), redemption fees and expenses associated with variable annuity or insurance contracts, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial adviser.
Review your fund’s expenses
The table below shows the expenses you would have paid on a $1,000 investment in Dreyfus Investment Portfolios, MidCap Stock Portfolio from January 1, 2017 to June 30, 2017. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
| | | | | | | | | |
Expenses and Value of a $1,000 Investment |
assuming actual returns for the six months ended June 30, 2017 |
| | | | | | Initial Shares | Service Shares |
Expenses paid per $1,000† | | | | | | $4.41 | | $5.67 |
Ending value (after expenses) | | | | | | $1,044.80 | | $1,043.30 |
COMPARING YOUR FUND’S EXPENSES
WITH THOSE OF OTHER FUNDS (Unaudited)
Using the SEC’s method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total cost) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
| | | | | | | | | |
Expenses and Value of a $1,000 Investment |
assuming a hypothetical 5% annualized return for the six months ended June 30, 2017 |
| | | | | | Initial Shares | Service Shares |
Expenses paid per $1,000† | | | | | | $4.36 | | $5.61 |
Ending value (after expenses) | | | | | | $1,020.48 | | $1,019.24 |
† Expenses are equal to the fund’s annualized expense ratio of .87% for Initial shares and 1.12% for Service shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
5
STATEMENT OF INVESTMENTS
June 30, 2017 (Unaudited)
| | | | | | |
| |
Common Stocks - 99.4% | | Shares | | Value ($) | |
Automobiles & Components - .3% | | | | | |
Visteon | | 5,300 | a | 540,918 | |
Banks - 6.2% | | | | | |
Cathay General Bancorp | | 69,395 | | 2,633,540 | |
Comerica | | 15,100 | | 1,105,924 | |
Commerce Bancshares | | 5,187 | b | 294,777 | |
East West Bancorp | | 15,465 | | 905,940 | |
First Horizon National | | 156,960 | b | 2,734,243 | |
Synovus Financial | | 75,290 | | 3,330,830 | |
UMB Financial | | 2,600 | | 194,636 | |
Washington Federal | | 13,300 | | 441,560 | |
| | | | | 11,641,450 | |
Capital Goods - 13.8% | | | | | |
A.O. Smith | | 23,000 | | 1,295,590 | |
Curtiss-Wright | | 31,900 | | 2,927,782 | |
Donaldson | | 71,200 | | 3,242,448 | |
GATX | | 33,585 | b | 2,158,508 | |
Huntington Ingalls Industries | | 2,765 | | 514,732 | |
Jacobs Engineering Group | | 9,500 | | 516,705 | |
Lennox International | | 18,875 | | 3,466,205 | |
Oshkosh | | 42,800 | | 2,948,064 | |
Owens Corning | | 22,990 | | 1,538,491 | |
Spirit AeroSystems Holdings, Cl. A | | 39,955 | | 2,314,993 | |
Toro | | 49,000 | | 3,395,210 | |
Woodward | | 25,670 | | 1,734,779 | |
| | | | | 26,053,507 | |
Commercial & Professional Services - .8% | | | | | |
MSA Safety | | 18,900 | | 1,534,113 | |
Consumer Durables & Apparel - 4.7% | | | | | |
Brunswick | | 54,420 | | 3,413,767 | |
KB Home | | 78,680 | b | 1,885,960 | |
NVR | | 1,470 | a,b | 3,543,597 | |
| | | | | 8,843,324 | |
Consumer Services - 1.7% | | | | | |
Darden Restaurants | | 28,265 | | 2,556,287 | |
International Speedway, Cl. A | | 16,000 | | 600,800 | |
| | | | | 3,157,087 | |
6
| | | | | | |
| |
Common Stocks - 99.4% (continued) | | Shares | | Value ($) | |
Diversified Financials - 2.9% | | | | | |
Eaton Vance | | 68,600 | | 3,246,152 | |
SEI Investments | | 42,800 | | 2,301,784 | |
| | | | | 5,547,936 | |
Energy - 2.7% | | | | | |
Cimarex Energy | | 8,300 | | 780,283 | |
CONSOL Energy | | 48,400 | a,b | 723,096 | |
ONEOK | | 46,700 | | 2,435,872 | |
World Fuel Services | | 32,050 | | 1,232,322 | |
| | | | | 5,171,573 | |
Food, Beverage & Tobacco - 3.0% | | | | | |
ConAgra Foods | | 62,400 | | 2,231,424 | |
Ingredion | | 26,450 | | 3,153,104 | |
Tootsie Roll Industries | | 6,000 | b | 209,100 | |
| | | | | 5,593,628 | |
Health Care Equipment & Services - 6.7% | | | | | |
Halyard Health | | 41,200 | a | 1,618,336 | |
Hologic | | 34,925 | a | 1,584,896 | |
Masimo | | 33,100 | a | 3,018,058 | |
Teleflex | | 13,575 | | 2,820,342 | |
WellCare Health Plans | | 20,100 | a | 3,609,156 | |
| | | | | 12,650,788 | |
Household & Personal Products - 1.6% | | | | | |
Church & Dwight | | 49,300 | | 2,557,684 | |
Spectrum Brands Holdings | | 3,800 | b | 475,152 | |
| | | | | 3,032,836 | |
Insurance - 5.7% | | | | | |
CNO Financial Group | | 136,360 | | 2,847,197 | |
Everest Re Group | | 3,770 | | 959,804 | |
Old Republic International | | 124,260 | | 2,426,798 | |
Primerica | | 38,445 | b | 2,912,209 | |
Reinsurance Group of America | | 12,945 | | 1,662,009 | |
| | | | | 10,808,017 | |
Materials - 9.5% | | | | | |
Cabot | | 10,795 | | 576,777 | |
Celanese, Ser. A | | 12,900 | | 1,224,726 | |
Chemours | | 23,700 | | 898,704 | |
Eagle Materials | | 18,100 | | 1,672,802 | |
Greif, Cl. A | | 24,800 | b | 1,383,344 | |
Huntsman | | 13,700 | | 354,008 | |
7
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | | | | | |
| |
Common Stocks - 99.4% (continued) | | Shares | | Value ($) | |
Materials - 9.5% (continued) | | | | | |
Louisiana-Pacific | | 55,700 | a | 1,342,927 | |
Owens-Illinois | | 134,700 | a | 3,222,024 | |
Reliance Steel & Aluminum | | 32,420 | | 2,360,500 | |
Sensient Technologies | | 11,600 | | 934,148 | |
Steel Dynamics | | 33,545 | | 1,201,246 | |
Worthington Industries | | 55,445 | b | 2,784,448 | |
| | | | | 17,955,654 | |
Media - 2.1% | | | | | |
John Wiley & Sons, Cl. A | | 27,800 | | 1,466,450 | |
Meredith | | 42,000 | b | 2,496,900 | |
| | | | | 3,963,350 | |
Pharmaceuticals, Biotechnology & Life Sciences - 4.6% | | | | | |
Agilent Technologies | | 19,150 | | 1,135,786 | |
Charles River Laboratories International | | 25,820 | a | 2,611,693 | |
Mettler-Toledo International | | 4,650 | a | 2,736,711 | |
United Therapeutics | | 16,875 | a | 2,189,194 | |
| | | | | 8,673,384 | |
Real Estate - 7.5% | | | | | |
Brixmor Property Group | | 8,800 | c | 157,344 | |
First Industrial Realty Trust | | 100,400 | c | 2,873,448 | |
Hospitality Properties Trust | | 17,635 | c | 514,060 | |
Kilroy Realty | | 20,355 | c | 1,529,678 | |
Lamar Advertising, Cl. A | | 45,095 | b,c | 3,317,639 | |
Tanger Factory Outlet Centers | | 65,700 | c | 1,706,886 | |
Urban Edge Properties | | 78,400 | c | 1,860,432 | |
Weingarten Realty Investors | | 71,570 | b,c | 2,154,257 | |
| | | | | 14,113,744 | |
Retailing - 4.7% | | | | | |
Best Buy | | 28,200 | | 1,616,706 | |
Big Lots | | 52,040 | b | 2,513,532 | |
Burlington Stores | | 18,500 | a | 1,701,815 | |
Chico's FAS | | 138,000 | | 1,299,960 | |
Dick's Sporting Goods | | 33,900 | b | 1,350,237 | |
Foot Locker | | 6,180 | | 304,550 | |
| | | | | 8,786,800 | |
Semiconductors & Semiconductor Equipment - 1.5% | | | | | |
Cirrus Logic | | 44,600 | a | 2,797,312 | |
Software & Services - 9.7% | | | | | |
Acxiom | | 31,250 | a | 811,875 | |
8
| | | | | | |
| |
Common Stocks - 99.4% (continued) | | Shares | | Value ($) | |
Software & Services - 9.7% (continued) | | | | | |
CDK Global | | 31,400 | | 1,948,684 | |
Citrix Systems | | 3,525 | a | 280,520 | |
Convergys | | 90,365 | | 2,148,880 | |
DST Systems | | 51,800 | | 3,196,060 | |
Fair Isaac | | 16,900 | | 2,356,029 | |
Manhattan Associates | | 59,150 | a | 2,842,749 | |
MAXIMUS | | 48,100 | b | 3,012,503 | |
Science Applications International | | 19,900 | | 1,381,458 | |
VeriSign | | 3,380 | a,b | 314,205 | |
| | | | | 18,292,963 | |
Technology Hardware & Equipment - 5.8% | | | | | |
Belden | | 23,880 | | 1,801,268 | |
Dolby Laboratories, Cl. A | | 26,600 | | 1,302,336 | |
F5 Networks | | 4,800 | a | 609,888 | |
Juniper Networks | | 48,000 | | 1,338,240 | |
NCR | | 74,935 | a | 3,060,345 | |
Tech Data | | 9,600 | a | 969,600 | |
Vishay Intertechnology | | 110,200 | b | 1,829,320 | |
| | | | | 10,910,997 | |
Utilities - 3.9% | | | | | |
FirstEnergy | | 58,775 | | 1,713,879 | |
MDU Resources Group | | 113,300 | | 2,968,460 | |
Westar Energy | | 52,390 | | 2,777,718 | |
| | | | | 7,460,057 | |
Total Common Stocks (cost $159,818,387) | | | | 187,529,438 | |
Other Investment - .4% | | | | | |
Registered Investment Company; | | | | | |
Dreyfus Institutional Preferred Government Plus Money Market Fund
(cost $678,642) | | 678,642 | d | 678,642 | |
9
STATEMENT OF INVESTMENTS (Unaudited) (continued)
| | | | | | |
| |
Investment of Cash Collateral for Securities Loaned - 5.5% | | Shares | | Value($) | |
Registered Investment Company; | | | | | |
Dreyfus Institutional Preferred Money Market Fund, Hamilton Shares
(cost $10,435,238) | | 10,435,238 | d | 10,435,238 | |
Total Investments (cost $170,932,267) | | 105.3% | | 198,643,318 | |
Liabilities, Less Cash and Receivables | | (5.3%) | | (10,065,798) | |
Net Assets | | 100.0% | | 188,577,520 | |
aNon-income producing security.
bSecurity, or portion thereof, on loan. At June 30, 2017, the value of the fund’s securities on loan was $24,044,657 and the value of the collateral held by the fund was $24,563,441, consisting of cash collateral of $10,435,238 and U.S. Government & Agency securities valued at $14,128,203.
cInvestment in real estate investment trust.
dInvestment in affiliated money market mutual fund.
| | |
Portfolio Summary (Unaudited) † | Value (%) |
Capital Goods | 13.8 |
Software & Services | 9.7 |
Materials | 9.5 |
Real Estate | 7.5 |
Health Care Equipment & Services | 6.7 |
Banks | 6.2 |
Money Market Investments | 5.9 |
Technology Hardware & Equipment | 5.8 |
Insurance | 5.7 |
Consumer Durables & Apparel | 4.7 |
Retailing | 4.7 |
Pharmaceuticals, Biotechnology & Life Sciences | 4.6 |
Utilities | 3.9 |
Food, Beverage & Tobacco | 3.0 |
Diversified Financials | 2.9 |
Energy | 2.7 |
Media | 2.1 |
Consumer Services | 1.7 |
Household & Personal Products | 1.6 |
Semiconductors & Semiconductor Equipment | 1.5 |
Commercial & Professional Services | .8 |
Automobiles & Components | .3 |
| | 105.3 |
† Based on net assets.
See notes to financial statements.
10
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2017 (Unaudited)
| | | | | | | |
| | | | | | |
| | | Cost | | Value | |
Assets ($): | | | | |
Investments in securities—See Statement of Investments
(including securities on loan, valued at $24,044,657)—Note 1(b): | | | | |
Unaffiliated issuers | | 159,818,387 | | 187,529,438 | |
Affiliated issuers | | 11,113,880 | | 11,113,880 | |
Cash | | | | | 25,414 | |
Receivable for investment securities sold | | | | | 427,774 | |
Dividends and securities lending income receivable | | | | | 194,997 | |
Prepaid expenses and other assets | | | | | 3,507 | |
| | | | | 199,295,010 | |
Liabilities ($): | | | | |
Due to The Dreyfus Corporation and affiliates—Note 3(b) | | | | | 137,860 | |
Liability for securities on loan—Note 1(b) | | | | | 10,435,238 | |
Payable for shares of Beneficial Interest redeemed | | | | | 100,276 | |
Accrued expenses | | | | | 44,116 | |
| | | | | 10,717,490 | |
Net Assets ($) | | | 188,577,520 | |
Composition of Net Assets ($): | | | | |
Paid-in capital | | | | | 152,750,854 | |
Accumulated undistributed investment income—net | | | | | 498,121 | |
Accumulated net realized gain (loss) on investments | | | | | 7,617,494 | |
Accumulated net unrealized appreciation (depreciation)
on investments | | | | 27,711,051 | |
Net Assets ($) | | | 188,577,520 | |
| | | | |
Net Asset Value Per Share | Initial Shares | Service Shares | |
Net Assets ($) | 119,909,955 | 68,667,565 | |
Shares Outstanding | 5,869,591 | 3,373,123 | |
Net Asset Value Per Share ($) | 20.43 | 20.36 | |
| | | | |
See notes to financial statements. | | | |
11
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2017 (Unaudited)
| | | | | | | |
| | | | | | | |
| | | | | | |
| | | | | | |
Investment Income ($): | | | | |
Income: | | | | |
Cash dividends: | | | | |
Unaffiliated issuers | | | 1,351,517 | |
Affiliated issuers | | | 2,542 | |
Income from securities lending—Note 1(b) | | | 22,300 | |
Interest | | | 10 | |
Total Income | | | 1,376,369 | |
Expenses: | | | | |
Management fee—Note 3(a) | | | 704,704 | |
Distribution fees—Note 3(b) | | | 82,855 | |
Prospectus and shareholders’ reports | | | 35,852 | |
Professional fees | | | 33,151 | |
Trustees’ fees and expenses—Note 3(c) | | | 23,201 | |
Custodian fees—Note 3(b) | | | 6,633 | |
Loan commitment fees—Note 2 | | | 1,860 | |
Shareholder servicing costs—Note 3(b) | | | 852 | |
Miscellaneous | | | 10,572 | |
Total Expenses | | | 899,680 | |
Less—reduction in fees due to earnings credits—Note 3(b) | | | (71) | |
Net Expenses | | | 899,609 | |
Investment Income—Net | | | 476,760 | |
Realized and Unrealized Gain (Loss) on Investments—Note 4 ($): | | |
Net realized gain (loss) on investments | 7,705,868 | |
Net unrealized appreciation (depreciation) on investments | | | 453 | |
Net Realized and Unrealized Gain (Loss) on Investments | | | 7,706,321 | |
Net Increase in Net Assets Resulting from Operations | | 8,183,081 | |
| | | | | | | |
See notes to financial statements. | | | | | |
12
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | | | |
| | | | | | | | | | |
| | | | Six Months Ended
June 30, 2017 (Unaudited) | | | | Year Ended
December 31, 2016 | |
Operations ($): | | | | | | | | |
Investment income—net | | | 476,760 | | | | 1,868,362 | |
Net realized gain (loss) on investments | | 7,705,868 | | | | 3,001,502 | |
Net unrealized appreciation (depreciation)
on investments | | 453 | | | | 19,665,475 | |
Net Increase (Decrease) in Net Assets
Resulting from Operations | 8,183,081 | | | | 24,535,339 | |
Distributions to Shareholders from ($): | | | | | | | | |
Investment income—net: | | | | | | | | |
Initial Shares | | | (1,318,278) | | | | (1,238,123) | |
Service Shares | | | (571,428) | | | | (437,208) | |
Net realized gain on investments: | | | | | | | | |
Initial Shares | | | (1,947,592) | | | | (8,219,760) | |
Service Shares | | | (1,048,153) | | | | (3,656,285) | |
Total Distributions | | | (4,885,451) | | | | (13,551,376) | |
Beneficial Interest Transactions ($): | | | | | | | | |
Net proceeds from shares sold: | | | | | | | | |
Initial Shares | | | 2,998,957 | | | | 9,957,409 | |
Service Shares | | | 8,827,560 | | | | 15,951,441 | |
Distributions reinvested: | | | | | | | | |
Initial Shares | | | 3,265,870 | | | | 9,457,883 | |
Service Shares | | | 1,619,581 | | | | 4,093,493 | |
Cost of shares redeemed: | | | | | | | | |
Initial Shares | | | (11,686,009) | | | | (26,474,897) | |
Service Shares | | | (6,944,564) | | | | (9,488,390) | |
Increase (Decrease) in Net Assets
from Beneficial Interest Transactions | (1,918,605) | | | | 3,496,939 | |
Total Increase (Decrease) in Net Assets | 1,379,025 | | | | 14,480,902 | |
Net Assets ($): | | | | | | | | |
Beginning of Period | | | 187,198,495 | | | | 172,717,593 | |
End of Period | | | 188,577,520 | | | | 187,198,495 | |
Undistributed investment income—net | 498,121 | | | | 1,911,067 | |
Capital Share Transactions (Shares): | | | | | | | | |
Initial Shares | | | | | | | | |
Shares sold | | | 146,951 | | | | 530,948 | |
Shares issued for distributions reinvested | | | 163,703 | | | | 537,991 | |
Shares redeemed | | | (574,337) | | | | (1,445,546) | |
Net Increase (Decrease) in Shares Outstanding | (263,683) | | | | (376,607) | |
Service Shares | | | | | | | | |
Shares sold | | | 436,186 | | | | 863,832 | |
Shares issued for distributions reinvested | | | 81,427 | | | | 233,381 | |
Shares redeemed | | | (342,313) | | | | (514,524) | |
Net Increase (Decrease) in Shares Outstanding | 175,300 | | | | 582,689 | |
| | | | | | | | | | |
See notes to financial statements. | | | | | | | | |
13
FINANCIAL HIGHLIGHTS
The following tables describe the performance for each share class for the fiscal periods indicated. All information (except portfolio turnover rate) reflects financial results for a single fund share. Total return shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. The fund’s total returns do not reflect expenses associated with variable annuity or insurance contracts. These figures have been derived from the fund’s financial statements.
| | | | | | | |
| | Six Months Ended June 30, 2017 (Unaudited) | |
| | |
| | Year Ended December 31, |
Initial Shares | 2016 | 2015 | 2014 | 2013 | 2012 |
Per Share Data ($): | | | | | | |
Net asset value, beginning of period | 20.09 | 18.95 | 23.03 | 20.87 | 15.68 | 13.16 |
Investment Operations: | | | | | | |
Investment income—neta | .06 | .21 | .18 | .14 | .20 | .23 |
Net realized and unrealized
gain (loss) on investments | .83 | 2.50 | (.50) | 2.35 | 5.24 | 2.36 |
Total from Investment Operations | .89 | 2.71 | (.32) | 2.49 | 5.44 | 2.59 |
Distributions: | | | | | | |
Dividends from
investment income—net | (.22) | (.21) | (.14) | (.21) | (.25) | (.07) |
Dividends from
net realized gain on investments | (.33) | (1.36) | (3.62) | (.12) | - | - |
Total Distributions | (.55) | (1.57) | (3.76) | (.33) | (.25) | (.07) |
Net asset value, end of period | 20.43 | 20.09 | 18.95 | 23.03 | 20.87 | 15.68 |
Total Return (%) | 4.48b | 15.47 | (2.29) | 12.09 | 34.99 | 19.67 |
Ratios/Supplemental Data (%): | | | | | | |
Ratio of total expenses
to average net assets | .87c | .85 | .85 | .85 | .86 | .85 |
Ratio of net expenses
to average net assets | .87c | .85 | .85 | .85 | .86 | .85 |
Ratio of net investment income
to average net assets | .59c | 1.16 | .89 | .64 | 1.11 | 1.58 |
Portfolio Turnover Rate | 36.03b | 65.52 | 80.27 | 83.06 | 68.72 | 73.96 |
Net Assets, end of period ($ x 1,000) | 119,910 | 123,226 | 123,354 | 160,482 | 158,682 | 128,410 |
a Based on average shares outstanding.
b Not annualized.
c Annualized.
See notes to financial statements.
14
| | | | | | | |
| | Six Months Ended June 30, 2017 (Unaudited) | |
| | |
| | Year Ended December 31, |
Service Shares | 2016 | 2015 | 2014 | 2013 | 2012 |
Per Share Data ($): | | | | | | |
Net asset value, beginning of period | 20.00 | 18.88 | 22.97 | 20.83 | 15.65 | 13.14 |
Investment Operations: | | | | | | |
Investment income—neta | .03 | .17 | .15 | .09 | .16 | .19 |
Net realized and unrealized
gain (loss) on investments | .84 | 2.47 | (.52) | 2.34 | 5.23 | 2.35 |
Total from Investment Operations | .87 | 2.64 | (.37) | 2.43 | 5.39 | 2.54 |
Distributions: | | | | | | |
Dividends from investment income—net | (.18) | (.16) | (.10) | (.17) | (.21) | (.03) |
Dividends from
net realized gain on investments | (.33) | (1.36) | (3.62) | (.12) | - | - |
Total Distributions | (.51) | (1.52) | (3.72) | (.29) | (.21) | (.03) |
Net asset value, end of period | 20.36 | 20.00 | 18.88 | 22.97 | 20.83 | 15.65 |
Total Return (%) | 4.33b | 15.20 | (2.52) | 11.76 | 34.70 | 19.34 |
Ratios/Supplemental Data (%): | | | | | | |
Ratio of total expenses
to average net assets | 1.12c | 1.10 | 1.10 | 1.10 | 1.11 | 1.10 |
Ratio of net expenses
to average net assets | 1.12c | 1.10 | 1.10 | 1.10 | 1.11 | 1.10 |
Ratio of net investment income
to average net assets | .35c | .94 | .72 | .40 | .86 | 1.32 |
Portfolio Turnover Rate | 36.03b | 65.52 | 80.27 | 83.06 | 68.72 | 73.96 |
Net Assets, end of period ($ x 1,000) | 68,668 | 63,972 | 49,363 | 35,213 | 23,838 | 17,836 |
a Based on average shares outstanding.
b Not annualized.
c Annualized.
See notes to financial statements.
15
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1—Significant Accounting Policies:
MidCap Stock Portfolio (the “fund”) is a separate diversified series of Dreyfus Investment Portfolios (the “Company”), which is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company and operates as a series company currently offering four series, including the fund. The fund is only offered to separate accounts established by insurance companies to fund variable annuity contracts and variable life insurance policies. The fund’s investment objective is to seek investment results that are greater than the total return performance of publicly traded common stocks of medium-size domestic companies in the aggregate, as represented by the Standard & Poor’s MidCap 400® Index. The Dreyfus Corporation (the “Manager” or “Dreyfus”), a wholly-owned subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”), serves as the fund’s investment adviser.
MBSC Securities Corporation (the “Distributor”), a wholly-owned subsidiary of Dreyfus, is the distributor of the fund’s shares, which are sold without a sales charge. The fund is authorized to issue an unlimited number of $.001 par value shares of Beneficial Interest in each of the following classes of shares: Initial and Service. Each class of shares has identical rights and privileges, except with respect to the Distribution Plan, and the expenses borne by each class, the allocation of certain transfer agency costs, and certain voting rights. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
The Company accounts separately for the assets, liabilities and operations of each series. Expenses directly attributable to each series are charged to that series’ operations; expenses which are applicable to all series are allocated among them on a pro rata basis.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification is the exclusive reference of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal laws are also sources of authoritative GAAP for SEC registrants. The fund’s financial statements are prepared in accordance with GAAP, which may require the use of management estimates and assumptions. Actual results could differ from those estimates.
16
The Company enters into contracts that contain a variety of indemnifications. The fund’s maximum exposure under these arrangements is unknown. The fund does not anticipate recognizing any loss related to these arrangements.
(a) Portfolio valuation: The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). GAAP establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value. This hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Additionally, GAAP provides guidance on determining whether the volume and activity in a market has decreased significantly and whether such a decrease in activity results in transactions that are not orderly. GAAP requires enhanced disclosures around valuation inputs and techniques used during annual and interim periods.
Various inputs are used in determining the value of the fund’s investments relating to fair value measurements. These inputs are summarized in the three broad levels listed below:
Level 1—unadjusted quoted prices in active markets for identical investments.
Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3—significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. Valuation techniques used to value the fund’s investments are as follows:
Investments in securities are valued at the last sales price on the securities exchange or national securities market on which such securities are primarily traded. Securities listed on the National Market System for which market quotations are available are valued at the official closing price or, if there is no official closing price that day, at the last sales price. For open short positions, asked prices are used for valuation purposes. Bid price is
17
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
used when no asked price is available. Registered investment companies that are not traded on an exchange are valued at their net asset value. All of the preceding securities are generally categorized within Level 1 of the fair value hierarchy.
Securities not listed on an exchange or the national securities market, or securities for which there were no transactions, are valued at the average of the most recent bid and asked prices. These securities are generally categorized within Level 2 of the fair value hierarchy.
Fair valuing of securities may be determined with the assistance of a pricing service using calculations based on indices of domestic securities and other appropriate indicators, such as prices of relevant American Depository Receipts and futures. Utilizing these techniques may result in transfers between Level 1 and Level 2 of the fair value hierarchy.
When market quotations or official closing prices are not readily available, or are determined not to reflect accurately fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded (for example, a foreign exchange or market), but before the fund calculates its net asset value, the fund may value these investments at fair value as determined in accordance with the procedures approved by the Company’s Board of Trustees (the “Board”). Certain factors may be considered when fair valuing investments such as: fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased and sold, and public trading in similar securities of the issuer or comparable issuers. These securities are either categorized within Level 2 or 3 of the fair value hierarchy depending on the relevant inputs used.
For restricted securities where observable inputs are limited, assumptions about market activity and risk are used and are generally categorized within Level 3 of the fair value hierarchy.
The following is a summary of the inputs used as of June 30, 2017 in valuing the fund’s investments:
18
| | | | | |
| | Level 1 -
Unadjusted
Quoted Prices | Level 2 – Other
Significant
Observable
Inputs | Level 3 -
Significant
Unobservable
Inputs | Total |
Assets ($) | | | | |
Investments in Securities: | | | | |
Equity Securities-
Domestic Common Stocks† | 187,529,438 | - | - | 187,529,438 |
Registered Investment Companies | 11,113,880 | - | - | 11,113,880 |
† See Statement of Investments for additional detailed categorizations.
At June 30, 2017, there were no transfers between levels of the fair value hierarchy.
(b) Securities transactions and investment income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income, including, where applicable, accretion of discount and amortization of premium on investments, is recognized on the accrual basis.
Pursuant to a securities lending agreement with The Bank of New York Mellon, a subsidiary of BNY Mellon and an affiliate of Dreyfus, the fund may lend securities to qualified institutions. It is the fund’s policy that, at origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral equivalent to at least 100% of the market value of securities on loan is maintained at all times. Collateral is either in the form of cash, which can be invested in certain money market mutual funds managed by Dreyfus, or U.S. Government and Agency securities. The fund is entitled to receive all dividends, interest and distributions on securities loaned, in addition to income earned as a result of the lending transaction. Should a borrower fail to return the securities in a timely manner, The Bank of New York Mellon is required to replace the securities for the benefit of the fund or credit the fund with the market value of the unreturned securities and is subrogated to the fund’s rights against the borrower and the collateral. Additionally, the contractual maturity of security lending transactions are on an overnight and continuous basis. During the period ended June 30, 2017, The Bank of New York Mellon earned $5,172 from lending portfolio securities, pursuant to the securities lending agreement.
(c) Affiliated issuers: Investments in other investment companies advised by Dreyfus are defined as “affiliated” under the Act. Investments in
19
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
affiliated investment companies during the period ended June 30, 2017 were as follows:
| | | | | | |
Affiliated Investment Company | Value 12/31/2016 ($) | Purchases ($) | Sales ($) | Value
6/30/2017 ($) | Net
Assets (%) |
Dreyfus Institutional Preferred Government Plus Money Market Fund | 1,199,499 | 12,249,810 | 12,770,667 | 678,642 | .4 |
Dreyfus Institutional Preferred Money Market Fund, Hamilton Shares | 12,494,102 | 64,114,465 | 66,173,329 | 10,435,238 | 5.5 |
Total | 13,693,601 | 76,364,275 | 78,943,996 | 11,113,880 | 5.9 |
(d) Dividends and distributions to shareholders: Dividends and distributions are recorded on the ex-dividend date. Dividends from investment income-net and dividends from net realized capital gains, if any, are normally declared and paid annually, but the fund may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that net realized capital gains can be offset by capital loss carryovers, it is the policy of the fund not to distribute such gains. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
(e) Federal income taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the applicable provisions of the Code, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes.
As of and during the period ended June 30, 2017, the fund did not have any liabilities for any uncertain tax positions. The fund recognizes interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statement of Operations. During the period ended June 30, 2017, the fund did not incur any interest or penalties.
Each tax year in the three-year period ended December 31, 2016 remains subject to examination by the Internal Revenue Service and state taxing authorities.
20
The tax character of distributions paid to shareholders during the fiscal year ended December 31, 2016 was as follows: ordinary income $1,675,331 and long-term capital gains $11,876,045. The tax character of current year distributions will be determined at the end of the current fiscal year.
NOTE 2—Bank Lines of Credit:
The fund participates with other Dreyfus-managed funds in an $810 million unsecured credit facility led by Citibank, N.A. and a $300 million unsecured credit facility provided by The Bank of New York Mellon (each, a “Facility”), each to be utilized primarily for temporary or emergency purposes, including the financing of redemptions. In connection therewith, the fund has agreed to pay its pro rata portion of commitment fees for each Facility. Interest is charged to the fund based on rates determined pursuant to the terms of the respective Facility at the time of borrowing. During the period ended June 30, 2017, the fund did not borrow under the Facilities.
NOTE 3—Management Fee and Other Transactions with Affiliates:
(a) Pursuant to a management agreement with Dreyfus, the management fee is computed at the annual rate of .75% of the value of the fund's average daily net assets and is payable monthly.
(b) Under the Distribution Plan adopted pursuant to Rule 12b-1 under the Act, Service shares pay the Distributor for distributing its shares, for servicing and/or maintaining Service shares’ shareholder accounts and for advertising and marketing for Service shares. The Distribution Plan provides for payments to be made at an annual rate of .25% of the value of the Service shares’ average daily net assets. The Distributor may make payments to Participating Insurance Companies and to brokers and dealers acting as principal underwriter for their variable insurance products. The fees payable under the Distribution Plan are payable without regard to actual expenses incurred. During the period ended June 30, 2017, Service shares were charged $82,855 pursuant to the Distribution Plan.
The fund has arrangements with the transfer agent and the custodian whereby the fund may receive earnings credits when positive cash balances are maintained, which are used to offset transfer agency and custody fees. For financial reporting purposes, the fund includes net earnings credits as an expense offset in the Statement of Operations.
The fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of Dreyfus, under a transfer agency agreement for providing transfer agency and cash management services for the fund. The majority of
21
NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
transfer agency fees are comprised of amounts paid on a per account basis, while cash management fees are related to fund subscriptions and redemptions. During the period ended June 30, 2017, the fund was charged $436 for transfer agency services and $55 for cash management services. These fees are included in Shareholder servicing costs in the Statement of Operations. Cash management fees were offset by earnings credits of $55.
The fund compensates The Bank of New York Mellon under a custody agreement for providing custodial services for the fund. These fees are determined based on net assets, geographic region and transaction activity. During the period ended June 30, 2017, the fund was charged $6,633 pursuant to the custody agreement. These fees were partially offset by earnings credits of $16.
During the period ended June 30, 2017, the fund was charged $5,598 for services performed by the Chief Compliance Officer and his staff.
The components of “Due to The Dreyfus Corporation and affiliates” in the Statement of Assets and Liabilities consist of: management fees $116,513, Distribution Plan fees $14,130, custodian fees $4,152, Chief Compliance Officer fees $2,802 and transfer agency fees $263.
(c) Each Board member also serves as a Board member of other funds within the Dreyfus complex. Annual retainer fees and attendance fees are allocated to each fund based on net assets.
NOTE 4—Securities Transactions:
The aggregate amount of purchases and sales of investment securities, excluding short-term securities, during the period ended June 30, 2017, amounted to $67,808,638 and $74,135,138, respectively.
At June 30, 2017, accumulated net unrealized appreciation on investments was $27,711,051, consisting of $31,818,328 gross unrealized appreciation and $4,107,277 gross unrealized depreciation.
At June 30, 2017, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes (see the Statement of Investments).
22
NOTES
23
NOTES
24
NOTES
25
Dreyfus Investment Portfolios, MidCap Stock Portfolio
200 Park Avenue
New York, NY 10166
Manager
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
Custodian
The Bank of New York Mellon
225 Liberty Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
Dreyfus Transfer, Inc.
200 Park Avenue
New York, NY 10166
Distributor
MBSC Securities Corporation
200 Park Avenue
New York, NY 10166
Telephone 1-800-258-4260 or 1-800-258-4261
Mail The Dreyfus Family of Funds, 144 Glenn Curtiss Boulevard, Uniondale, NY 11556-0144 Attn: Institutional Services Department
E-mail Send your request to info@dreyfus.com
Internet Information can be viewed online or downloaded at www.dreyfus.com
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities, and information regarding how the fund voted these proxies for the most recent 12-month period ended June 30 is available at http://www.dreyfus.com and on the SEC’s website at http://www.sec.gov. The description of the policies and procedures is also available without charge, upon request, by calling 1-800-DREYFUS.
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© 2017 MBSC Securities Corporation
0174SA0617 | 
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